When you operate a business that offers automotive services, you face unique hazards. Moving vehicles, tools, oil spills, and equipment such as car lifts can all present risks to the people who visit your location, and accidents can occur when vehicles are test-driven. Garage Liability Insurance is specifically designed to protect your automotive business from these risks, providing financial support if an incident arises.

What is Garage Liability Insurance?

Garage Liability Insurance provides coverage for accidental third-party bodily injury and property damage resulting from your garage operations. This coverage applies to bodily injury involving non-employees, including customers, vendors, and partners, and to damage involving third-party property, like a customer’s laptop.

Excluded from this property coverage, however, are autos under your business’s care, custody, or control, which would include customer cars left at your business for servicing, repair, storage, or safekeeping. For coverage of your customer’s autos, you’ll need garagekeepers insurance.

Example:

• A mechanic at your auto shop is moving a customer car into a repair bay. As he is moving the car, he accidentally runs over a customer’s foot. The customer suffers a broken foot and must receive medical treatment. Garage Liability Insurance would cover medical expenses and any damages.

Who needs Garage Liability Insurance?

Any company that operates an automotive services business should consider Garage Liability Insurance, particularly because these businesses interact frequently with members of the public. Businesses that commonly purchase Garage Liability Insurance include auto dealerships, car repair shops, towing companies, car washes, car detailing businesses, parking garages, and others. Since third-party bodily injury and property damage caused by garage operations are typically not covered by other types of insurance, Garage Liability Insurance can step in to provide funds if someone is injured or property is damaged as a result of your garage operations. 

Your Garage Liability coverage may differ depending on the specific nature of your business. For example, a car repair shop will have different exposures than a parking garage. You can work with your insurer to make sure that you have appropriate coverage. 

Example:

• While test driving a recently repaired car, one of your mechanics collides with another vehicle on the street. Garage Liability Insurance would pay for the damage to the other vehicle. 

What does Garage Liability Insurance cover?

Garage Liability Insurance is typically divided into two sections: commercial auto liability coverage and general liability coverage. In the standard Garage Coverage Form, you’ll see these sections labeled as “Garage Operations — Covered Autos” and “Garage Operations — Other Than Covered Autos.”

Commercial Auto Liability Coverage

The commercial auto liability coverage portion of Garage Liability Insurance provides coverage for accidental third-party bodily injury and property damage resulting from garage operations involving the ownership, maintenance, or use of covered vehicles. This includes vehicles owned by the policyholder as well as incidents that occur when your employees drive someone else’s car for work purposes, such as a mechanic test driving a customer’s car or a parking valet moving a car to park it. 

For example, if your employee collides with another vehicle while driving a customer’s car, Garage Liability Insurance would cover damage to the other vehicle and any injuries the other driver sustains. However, it’s important to understand that the property coverage would not extend to your customer’s car. You would need garagekeepers insurance to cover damage to vehicles in your care, custody, or control. 

Example:

• One of your parking valets backs a customer’s car into a passing vehicle, injuring the other driver and damaging both cars. Your Garage Liability Insurance would cover medical expenses and damages for the driver’s injuries as well as damages to the injured driver’s vehicle. However, damages to the customer’s car would not be covered under Garage Liability Insurance.

General Liability Coverage 

The general liability coverage portion of Garage Liability Insurance primarily covers incidents of third-party property damage and bodily injury that occur at your garage and don’t involve your covered autos. 

Bodily Injury

If a customer or other non-employee is injured on your garage’s premises, you could be held liable. Garages can be dangerous and customers could easily slip on spilled oil or trip over tools, hurting themselves. If someone who is not your employee is injured in your garage, Garage Liability Insurance will cover medical expenses, lost income, pain and suffering, funeral expenses, and legal fees if there is a lawsuit.

Example:

• A technician comes to refill your vending machines and takes a shortcut through your service center, where he trips and falls into a service bay, breaking his leg. Garage liability insurance would pay for the technician’s medical expenses and cover your legal fees if he sues.

Property Damage

If you or your employees accidentally damage another person or company’s property, Garage Liability Insurance will cover the costs of replacement or repair. Excluded from this property coverage is third-party property in your business’s care, custody, or control, which would include a customer’s auto or auto equipment left in your business’s care for service, repair, storage, or safekeeping. Coverage for customer property in your care, custody, or control can be provided by garagekeepers insurance.

Example:

• A mechanic at your auto body shop accidentally drops a box of tools on a customer’s brand new phone, shattering it. Your Garage Liability Insurance would cover the loss. 

Products and Completed Operations

Garage Liability Insurance also typically provides products and completed operations coverage. This covers third-party property damage or injuries that take place away from your business’s premises and are caused by products you sell or by your work after it has been completed. If a mechanic uses the wrong car part in a repair and it subsequently damages the vehicle, the general liability coverage portion of Garage Liability Insurance would cover the damage. 

Example:

• One of your mechanics uses the wrong air filter in a customer’s car, causing damage to the engine. Your Garage Liability Insurance would cover the damages. 

What are the key exclusions to Garage Liability Insurance?

It’s important to be aware that Garage Liability Insurance excludes coverage for property under your care, custody, or control. Since customer vehicles left at your business for repair, servicing, storage, or safekeeping are considered to be in your care, any damage to them while under your care would not be covered by a Garage Liability Insurance policy. You will need garagekeepers coverage to cover customers’ cars. Depending on the insurer, you may be able to add this coverage to your Garage Liability Insurance policy by endorsement.

In addition, Garage Liability Insurance does not cover:

• Expected or intentional injury or property damage
• Liability assumed under a contract or agreement
• Employee injuries
• Vehicles that are leased to customers
• Damage or injury resulting from pollution
• Autos used in professional or organized racing, stunting, or demolition events
• Damage to your own work or products
• War

What is the difference between Garage Liability and general liability?

Garage Liability Insurance and general liability insurance are similar—they both protect companies from claims of third-party property damage and bodily injury. However, there are key differences between the two types of insurance. 

General liability insurance typically excludes incidents of third-party bodily injury and property damage that arise from garage operations. These policies also do not include any commercial auto liability coverage. However, CGL policies do include coverage for personal and advertising injury, which Garage Liability Insurance does not provide.

Garage Liability Insurance does cover accidents that occur in the garage. It also provides commercial auto liability coverage for autos you own or drive for work purposes. 

What is the Garage Coverage Form?

The Garage Coverage Form is a standard form commonly used by insurers that can provide several types of coverage for automotive businesses. Garage Liability Insurance is one of the types of insurance that is available on the Garage Coverage form. The other coverages featured include garagekeepers insurance, which covers customers’ vehicles while they are in your care, and physical damage coverage, which covers damage or loss of your company’s vehicles from fires, floods, vandalism, collisions, theft, or other hazards. 

Final Word

Garage Liability Insurance protects your company from the risks that arise when you operate a garage, combining commercial general liability coverage and commercial auto liability coverage. The general liability section of coverage provides funds to cover damages if someone who is not your employee is injured or has property damaged as a result of your garage operations, while commercial auto liability coverage protects your company if a car you own or that is being used for business purposes is involved in an accident. A Garage Liability Insurance policy can provide crucial financial support that will allow your business to continue function in the event of a costly accident or lawsuit.